Everyone 'Has To Participate' To Avoid Fiscal Cliff

Listen carefully to both President Obama and Republican leaders, and you hear hints of room for compromise. They're talking of taxes and spending as a deadline approaches, December 31st, when higher taxes and spending cuts would take effect. That would reduce the federal deficit, but also damage the economy, according to forecasters.

Democrats are insisting on higher taxes for the wealthiest part of any deal, and some say, if necessary, they are willing to go over the so-called fiscal cliff. Richard Trumka, head of the AFL/CIO said yesterday, there is no fiscal cliff. He called it a manufactured crisis.

And then there's the view of our next guest. Democratic Senator Patty Murray will soon serve as chair of the Senate Budget Committee.

If you don't get the deal that you want, are you willing to go over the cliff, to go past January 1st without an agreement?

SENATOR PATTY MURRAY: Well, I think that it is extremely important to understand that none of us want to start next year with tax increases for Americans. But I can tell you this: Working families across this country don't want to say OK, we'll bear the burden of all this. We will have our Medicare impacted. We will have our education funding impacted.

I think the Republicans have to understand that the American people voted in this election for President Obama and a record number of senators who campaigned on saying everybody has to participate. If the Republicans say, no, we're going to put a little line in the sand and say the wealthiest Americans don't have to pay any increased revenue or be a part of this solution, then we will go past the December 31st deadline and begin over next year with addressing this challenge. And any package that we put out there will be a tax cut, and I think Republicans will find themselves in a real box.

INSKEEP: I want to ask you about that, Senator, because it's been argued that you can go past January 1st - tax increases take a while to really take effect. Spending cuts take a while to really take effect. But I'm remembering that in 2011, one of the major reasons that the U.S. had its credit downgraded was that Congress and the White House could not agree on basic fiscal policy. Would it be catastrophic to the financial markets if you show you can't agree again by December 31st?

MURRAY: Well, it's puts us in a very different place if December 31st comes and goes, and all of the sudden the Bush tax cuts all expire and the revenue coming into the federal government increases dramatically across the board - including the wealthiest Americans, those who earn over $250,000 a year. That revenue stream coming in actually helps us solve a budget problem. Now, none of us want to see that happen, because average, middle-class Americans really cannot afford to see their tax burden go up next year. But it does put us in a different place in terms of revenue as part of how we balance our budget.

INSKEEP: So if the markets start gyrating, as they did a little bit right after the election, you're going to look past that?

MURRAY: I think we have to look long-term here at what a bad budget decision will do to our middle-class families and to our country if we agree to letting the wealthiest Americans off the hook for fear of what might happen on January 1st.

INSKEEP: Let me paraphrase what Republicans have been saying in recent days, Senator Murray. As I understand it, they've said, OK, we can talk about higher taxes for the wealthy, but as part of that discussion, we also need changes to entitlement programs - cuts, let's call them, to entitlement programs. Is it acceptable to you to have those on the table as part of this discussion?

MURRAY: Well, as you know, I chaired the supercommittee last year.

INSKEEP: Let's remind people that that was the committee that was supposed to come up with an agreement to avoid this very problem. Right. Go ahead.

MURRAY: And, in fact, Democrats put very serious proposals on the table to deal with our budget spending cuts and entitlements only if we had revenue to match that. That is why this question that is in front of us today is so important. Will the Republicans agree on extending the tax cuts for middle-class families - 98 percent of our country today - and say that those earning over 250,000 don't continue to get tax cuts on their earnings over 250,000 or not.

INSKEEP: You said balancing spending cuts with revenue, with tax increases. What's a ratio you can live with? Does it have to be 50-50? Can it be fewer tax increases than spending cuts, which is where most people have been in recent years?

MURRAY: Well, I think there is room for discussion there. The president, as well as leaders of Congress, will be determining that particular ratio. But it can't be 10 percent revenue, 90 percent spending cuts and entitlements. It has to be a much more fair and balanced - closer to 40 or 50 percent - for most of us to even consider it.

INSKEEP: Senator, I'm glad you mentioned that supercommittee that you were on late last year, because I mentioned on Twitter that I was going to be talking with you and asked if people had questions. And one question quickly came back: Why does she think that Congress can do any better now than they did with the supercommittee, which failed?

MURRAY: Well, I think what is going to allow us to get to a deal today that wasn't in place a year ago is this is now real. On December 31st, the Bush tax cuts expire for everyone. That's what we're trying to avoid from happening. But the Republicans can go in their corner and say no, no, no. We're going to vote for increased taxes. But if they do nothing, those increased taxes will take place. I think that box that they are now in allows us to move forward on a decision that I think will be much better for the country.